10 Top Strategies to Lower E-commerce Shipping Costs in 2024

10 Top Strategies to Lower E-commerce Shipping Costs in 2024

Cathy Carpetta

Cathy Carpetta

December 8, 2023

In the fast-paced UK e-commerce market, efficient e-commerce shipping cost management is key to success. With an expected growth to £177.72 billion by 2023, businesses need to optimise shipping to attract and retain customers, as 61% are likely to abandon carts if shipping fees are too high.

1. How are transportation fees calculated?

1.1 Package weight

Most carriers, including Royal Mail, DPD, Chronopost, Mondial Relay and Evri, use the package weight to calculate logistic fees.

The rationale behind it: the heavier the package, the more it will cost.

1.2 Package size

Besides weight, the size of the package also plays a crucial role. Larger packages occupy more space, limiting the number of items a carrier can transport at once. 

This is why carriers, including air and road transport companies like DHL, FedEx or UPS, use dimensional weight for pricing. 

Dimensional weight is calculated using the formula (length x width x height) / 5000, measured in centimetres. 

It helps determine the shipping price based on the larger of the two weights — actual or dimensional. 

Understanding how carriers are calculating shipping costs can help you optimise packaging to reduce shipping expenses.

At Bigblue, we select the best packaging to ship your products. We aim to eliminate the empty space in your packages, save you money, and lower the environmental impact of your products.

1.3 Contents

If your package contains high-value items, it's prudent to opt for additional insurance to safeguard against damage or loss. Shipping luxury items, such as expensive perfumes or designer pieces, demands extra caution.

True, the package becomes the carrier’s responsibility when the merchandise arrives at the warehouse until they are delivered to the final client. However, there is a cap on the compensations and indemnities, and they end up being fixed at their discretion.

In the event of the loss of an expensive item, it is quite likely that the carrier’s compensation policy will partially cover the damages. Not only will you not recover the full value of your package, but you will also be obliged to send a new product to the client at your expense. 

1.4 Delivery speed

Standard delivery will have a lower price than express delivery.

As you know, customers are becoming extremely demanding when it comes to delivery time. They expect their package to be delivered within 48 hours.

Express shipping entails additional costs that are often negatively perceived by customers. Your challenge will be to educate them on the benefits of standard delivery: less expensive and more environmentally friendly. This will help you both cut costs and improve your brand’s image.

1.5 Additional costs to keep in mind

Shipping costs are not just about the transportation itself. 

They also include all the expenses involved in preparing the package, such as storage, picking, and packaging (including personalisation). Finally, if you are shipping internationally, you will have to pay certain taxes or duties.

10 strategies to help you optimise your shipping costs 

8.1 Multi-carrier approach

Employing a variety of shipping carriers offers flexibility and access to different shipping methods. For domestic shipping within the UK, carriers like Royal Mail are popular for their reliability and trust. For e-commerce businesses, diversifying carriers means potentially accessing more competitive options that cater to various customer needs.

Bigblue Tips

👉 Experience efficiency in
logistics with Bigblue. Leverage our advanced WMS and TMS for streamlined delivery and cost savings. Our smart carrier selection ensures fast and affordable shipping solutions.

8.2 International shipping policies

Navigating international shipping has become more complex post-Brexit, with additional customs duties and regulations. Clear communication of shipping policies and fees is essential for expanding global reach while maintaining customer trust.

8.3 Balancing free shipping with financial health

Offering free shipping is an effective strategy to attract customers, but it must be balanced with the business's financial health. Setting minimum order values for free shipping can be a sustainable approach. 

Continuing to manage it smartly is crucial. This can involve promotional strategies like limited-time free shipping offers or loyalty program benefits, which can boost customer acquisition and retention while managing cost impact.

8.4 Efficient delivery service

Ensuring a fast and accurate delivery process, including efficient pick, pack, and ship operations, is essential for meeting customer expectations. Timely delivery enhances customer satisfaction and loyalty, directly influencing repeat business and positive reviews.

8.5 Flexible delivery choices

Offering a range of delivery options, including next-day and standard shipping, allows customers to choose based on their needs and urgency. This flexibility is especially important in today's market, where delivery time can be a deciding factor for many online shoppers.

8.6 Leveraging technology

Incorporating technology to streamline the shipping process is vital. This includes the use of automated systems for generating shipping labels, tracking deliveries, and reducing shipping errors. For instance, at Bigblue we use algorithms to detect invalid addresses, preventing shipping errors and ensuring efficiency.

8.7 Understanding consumer behaviour

Recognising patterns like the high rate of online returns (54% in the UK) helps in optimising the shipping process. An efficient returns process not only improves customer satisfaction but also helps in retaining loyalty.

8.8 Good customer service

Be ready to help customers with any questions or problems they have with shipping. This builds trust and loyalty.

Bigblue Tips 

Use personalised and updated real-time order
tracking emails to reduce customer support!
➡️ Provide your customers with all the essential details like order status, number of items, carrier details, delivery address, and updates on parcel status with ETAs and alerts.

8.9 Data-driven shipping decisions

Using data analytics to understand shipping patterns, peak times, and customer preferences can lead to more informed and cost-effective shipping decisions. This approach enables businesses to optimise their shipping options and costs based on actual customer behaviour and preferences.

8.10 Smart packaging and sustainability

Adopting smart packaging solutions that match product size helps reduce shipping rates and waste. 40% of UK shoppers are willing to pay more for carbon-neutral shipping, signalling a shift towards eco-friendliness in consumer preferences.

Offering eco-friendly shipping options appeals to environmentally conscious consumers and can differentiate a brand in a competitive market.

Hire a logistics provider to reduce shipping costs

Logistics are incredibly time-consuming. You should be investing your energy in growing your business.

Working with a logistics company allows you to focus on what matters most, avoid time-consuming tasks, and help you provide an exceptional delivery experience. 84% of shoppers are unwilling to buy from a company following a poor delivery experience.

At Bigblue, we specialise in logistics for e-commerce. We take care of your stock, prepare your shipments, and release you from time-consuming tasks while keeping your customers happy. Above all, we negotiate prices with carriers for you.

Optimising your shipping costs for your online store involves a multifaceted approach that includes understanding market trends, leveraging technology, and adapting to consumer preferences and environmental concerns. By implementing these strategies, e-commerce businesses can enhance customer satisfaction, streamline operations, and increase profitability in a highly competitive market.

Frequently asked questions
Everything you need to know.
Why are shipping costs crucial in e-commerce?

Shipping costs significantly influence customer purchasing decisions and satisfaction. High shipping fees are a primary reason for cart abandonment.

What strategies can reduce shipping costs in e-commerce? ‍

Employing smart packaging, leveraging technology for address verification, and using a multi-carrier strategy are effective ways to reduce costs.

Is free shipping a viable strategy?

While free shipping can attract customers, it must be balanced against the business's financial viability, especially for small businesses. Offering free shipping above a certain order value can be a more sustainable approach to keeping a good profit margin.

How do environmental concerns impact shipping?

With a growing consumer focus on sustainability, offering eco-friendly shipping options can be a differentiator and align with consumer values.

What are the implications of Brexit on shipping?

Brexit has introduced new complexities in shipping to the EU, including customs duties and increased paperwork. Clear communication with customers about these changes is essential.